Empty Supertankers Uncover Truths About Today’s Oil Market

They are slowly plowing their way across thousands of miles of ocean toward America’s Gulf of Mexico coastline. As they do, twelve empty supertankers are also revealing a few truths about today’s global oil market.

In normal times, the vessels would be filled with heavy, high sulfur Middle East oil for delivery to refineries in places like Houston or New Orleans. Not now though. They are sailing cargo-less, a practice that vessel owners normally try to avoid because ships earn money by making deliveries.

The 12 vessels are making voyages of as much as 21,000 miles direct from Asia, all the way around South Africa, holding nothing but seawater for stability because Middle East producers are restricting supplies. Still, America’s booming volumes of light crude must still be exported, and there aren’t enough supertankers in the Atlantic Ocean for the job. So they’re coming empty.

“What’s driving this is a U.S. oil market that’s looking relatively bearish with domestic production estimates trending higher, and persistent crude oil builds we have seen for the last few weeks,” said Warren Patterson, head of commodities strategy at ING Bank NV in Amsterdam. “At the same time, OPEC cuts are supporting international grades like Brent, creating an export incentive.”

The U.S. both exports and imports large amounts of crude because the variety it pumps — especially newer supplies from shale formations — is very different from the type that’s found in the Middle East. OPEC members are likely cutting heavier grades while American exports are predominantly lighter, Patterson said.

Gasoline Glut

By industry standards, American oil is considered light and low in sulfur, making it great for churning out gasoline, with the result that a glut of the automotive fuel is starting to build up. By contrast, Middle East crude often needs more processing — not a problem for Gulf of Mexico plants that were designed specifically for that task — but it can have a smaller gasoline yield.

“There is still going to be a lot of growth from U.S. tight oil this year,” said James Davis, director of short-term global oil service at Facts Global Energy. “This will continue to push U.S. exports up.”

Shippers are counting on the U.S. exports to help the tanker market withstand supply restrictions by the Organization of Petroleum Exporting Countries and allies including Russia. Industry analysts, who actually raised their estimates for what they think the ships will earn this year after the OPEC+ pact was announced in December, are citing rising American shipments as a contributing factor.

There are usually three or four empty supertankers — very large crude carriers in industry jargon — that would sail empty to the U.S. at any one time, according to shipbrokers.

The shift has produced knock-on effects around the shipping market. Daily earnings for the VLCCs, which can haul two million barrels of oil, on the benchmark Middle East-to-China route doubled to $29,337 in the past week, according to Baltic Exchange data.

“Following a fixing frenzy from the U.S. Gulf Coast late last week, most available tonnage in the Atlantic basin has been soaked up,” said Espen Fjermestad, an analyst at Fearnley Securities AS in Oslo. “With ships ballasting West, rates have shifted up also in the East.”

Now that the USA is a total police state, Americans are finding out that changing anything is impossible and that freedom is lost forever.

Go Speed Racer on Sun, 24th Feb 2019 10:47 pm

Things were pretty good going into the 1970’s.
U could burn garbage in your own backyard.

It was OK to dump motor oil down the street drains.
Airline passengers could carry a gun,
there was not any GMO Monsanto food.

The music was better and we had Japanese
manufactured stereo equipment.
With big speakers.

and we had just put a man on the moon.

You could also beat your wife, and your kids,
to keep them in line.

the landline telephones had a far greater
audio quality than junky lousy cellphones.

The cars got 9 miles per gallon and were
bigger than 3rd world countries.

U paid your bills with an envelope, a stamp, and
a walk to the mailbox. Now U beat your brains out
with online billpayer, for hours and hours, if it works at all.
everything pretty much sucks since then.
Having internet and smart phones is no
substitute for a sensible society.

The above list of all the dumb laws passed
also does nothing to fix society. Just keeps
breaking society.

Apple corp won’t fix their software bugs.

And the democrats want to bring ISIS bride
with ISIS son into the country.

If U don’t want to get your head sawed off
with a Christmas tree saw, better keep
voting for Trump.

Mick on Mon, 25th Feb 2019 4:18 am

At least you can still have your sofa and tire burning nights to look forward to. Gsr

This is the fourth week EVER with this much exports. And is record crude exports. Yes, going all the way back to Titusville, we have never exported this much crude. (Yes, I realize it is not net exports.)

It also had its second week of crude AND products net exports (since the 40s or 50s).

Go Speed, yep! Those were the good old days. I had a Buick that weighed in at about three tons and had a steel front bumper that weighed more than I did. I could push trees over with that car. I drove it until it burned more oil than gas. lol

The US sure has gone down hill since then. I now live in a country where you walk down the street to pay your bills with cash. Checks are rarely used for anything and credit cards are still only used by the wealthier levels and most stores will not accept them. Nothing is paid online. Cash is king. If you don’t have it, you don’t spend it. Real freedom.

Anonymouse on Wed, 27th Feb 2019 10:45 pm

Who the fook is this ‘we’ Nonytard? The only gas you have ever exported, is your own ass-gas. And market interest in that export is extremely limited. You have no connection to anyone or anything in the uS oil cartel. Cheerleading for endless oil consumption or production as the case may be, with your motley collection of un-imaginative sock-puppets here, hardly counts, in case you didn’t realize. Which I am sure, you do not.